RUSSA

CONFIRMATION OF BENEFICIAL OWNERSHIP FOR RUSSIAN SOURCE INCOME

The Russian Ministry of Finance further clarifies what is needed for confirming beneficial ownership for Russian source income.

In a recent letter issued by the Russian Ministry of Finance, they explained that, in order to apply reduced withholding tax rates under a double tax treaty, the recipient of the income must provide the tax agent with a tax residency certificate. In the same letter the Ministry states that the tax agent may also request confirmation that the recipient has the actual right to receive the corresponding income, i.e. that he is the beneficial owner of such income.

The latest comments could be interpreted that, in order to apply the reduced tax rates provided in the relevant treaty, both documents must be obtained before the date the income is actually paid.

currency

LIFTING OF ALL REMAINING CURRENCY CONTROLS

In the immediate aftermath of the banking crisis of March 2013 the Cyprus government imposed temporary restrictions on currency transfers in order to prevent a mass withdrawal of deposits then in the banking system and rapid outflow of funds. The controls, which affected only deposits in existence at the time of the banking crisis, and not funds subsequently deposited, have gradually been relaxed following the recapitalization of the banking sector.

On 3 April 2015 the government announced the abolition of all the remaining restrictions, so that funds are freely transferable in every way, just as they were prior to the imposition of controls.

While the restrictions did not have a practical impact on most international investors, nevertheless their final abolition is a welcome confirmation of the progress that has been made in rehabilitating the banking sector and the real economy of Cyprus.

bahrain

TAX AGREEMENT WITH BAHRAIN

The agreement for the avoidance of double-taxation with respect to taxes on income was signed recently between the Republic of Cyprus and the Government of the Kingdom of Bahrain. The agreement is based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital.

According to the text agreed, the foresaid agreement will contribute to the further development of commercial and economic relations between the Republic of Cyprus and the government of the Kingdom of Bahrain as well as with other countries.

As noted, the update, maintenance and expansion of the existing network of double-tax avoidance agreements, which are of great economic and political importance, further aim to enhance and attract foreign investment and to promote Cyprus as an international business center.

eu

EU – PROPOSED AUTOMATIC EXCHANGE OF INFORMATION ON ADVANCE CROSS-BORDER RULINGS AND ADVANCE PRICING ARRANGEMENTS

On 18 March 2015, the European Commission published a proposal to amend the Directive on administrative cooperation between Member States (Directive 2011/16/EU) introducing a mandatory automatic exchange of information on advance cross-border rulings and advance pricing arrangements. The proposal is part of the Commission’s response to the publication of confidential documents on Luxembourg tax deals by The Irish Times and other members of the International Consortium of Investigative Journalists in November 2014 in what became known as “LuxLeaks”.

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